The U.S. Justice Division stated on Tuesday it has unraveled its biggest-ever cryptocurrency theft, seizing a record-shattering $3.6 billion in bitcoin tied to the 2016 hack of digital foreign money change Bitfinex and arresting a husband-and-wife crew on cash laundering expenses.
Ilya “Dutch” Lichtenstein, 34, and his spouse, Heather Morgan, 31, New Yorkers who had been arrested in Manhattan Tuesday morning, spent the unlawful proceeds on gadgets starting from gold and non-fungible tokens to a $500 Walmart present card, prosecutors stated.
The couple had lively public profiles, with Morgan often known as rap singer “Razzlekhan,” a pseudonym that she stated on her web site referred to Genghis Khan “however with extra pizzazz.”
It was the Justice Division’s largest monetary seizure, Deputy Lawyer Basic Lisa Monaco stated, including in a press release that it exhibits cryptocurrency is “not a protected haven for criminals.”
Lichtenstein and Morgan face expenses of conspiring to commit cash laundering in addition to to defraud the USA. The case was filed in a federal courtroom in Washington, D.C.
At their preliminary appearances in federal courtroom in Manhattan on Tuesday afternoon, U.S. Justice of the Peace Decide Debra Freeman set bond at $5 million for Lichtenstein and $3 million for Morgan and demanded that their mother and father put up their properties as safety for his or her return to courtroom.
The pair is accused of conspiring to launder 119,754 bitcoin stolen after a hacker broke into Bitfinex and initiated greater than 2,000 unauthorized transactions. Justice Division officers stated the transactions on the time had been valued at $71 million in bitcoin, however with the rise within the foreign money’s worth, the worth now could be over $4.5 billion.
A key clue could have come from the 2017 bust of an underground digital market used to launder a portion of the funds. U.S. officers stated among the cash was transferred to AlphaBay, an anything-goes model of eBay hosted on the darkish internet.
When the positioning was taken down, it doubtless allowed authorities to entry AlphaBay’s inside transaction logs and join them to a cryptocurrency account in Lichtenstein’s title, in keeping with digital foreign money monitoring firm Elliptic.
Bitfinex stated in a press release it was working with the Division of Justice to “set up our rights to a return of the stolen bitcoin.”
“PROTECT YOUR BUSINESS FROM CYBERCRIMINALS”
Lichtenstein and Morgan additionally tried to launder cash through a community of foreign money exchanges or claimed that the cash represented funds to Morgan’s startup, the Division of Justice stated.
Along with her rap singer profile, Morgan had sidelines within the portray, trend design, and writing worlds, the place she pitched herself as a sort of company coach. One in every of her current items was titled, partially, “Tricks to Shield Your Enterprise from Cybercriminals” and featured an interview with a cryptocurrency change proprietor about the best way to forestall fraud.
Morgan, sporting a white hoodie at her courtroom look, regularly glanced again at her mother and father, who had been seated within the viewers of the courtroom. Each she and Lichtenstein, who holds twin U.S.-Russian citizenship, nodded as Freeman warned them of extreme penalties in the event that they tried to flee.
They’ll each be positioned on home arrest, with digital monitoring, and will likely be barred from participating in cryptocurrency transactions pending trial, Freeman stated. A decide in Washington, the place additional hearings will likely be held, might later set totally different situations, she stated.
Prosecutors sought to have each detained forward of trial, arguing they posed a flight danger. However Freeman stated she was swayed by protection lawyer Anirudh Bansal’s argument that each Lichtenstein and Morgan had recognized they had been below investigation since November and nonetheless remained in the USA.
Tuesday’s felony criticism got here greater than 4 months after Monaco introduced the division was launching https://www.reuters.com/world/us/us-justice-dept-launches-new-initiatives-cryptocurrencies-contractor-hacks-2021-10-06 a brand new Nationwide Cryptocurrency Enforcement Crew, which includes a mixture of anti-money laundering and cybersecurity consultants.
Cyber criminals who assault corporations, municipalities and people with ransomware typically demand fee in cryptocurrency.
In a single high-profile instance final yr, former companions and associates of the ransomware group REvil https://www.reuters.com/expertise/exclusive-governments-turn-tables-ransomware-gang-revil-by-pushing-it-offline-2021-10-21 prompted a widespread fuel scarcity on the U.S. East Coast when it used encryption software program known as DarkSide to launch a cyber assault on the Colonial Pipeline.
The Justice Division later recovered https://www.reuters.com/enterprise/power/us-announce-recovery-millions-colonial-pipeline-ransomware-attack-2021-06-07 some $2.3 million in cryptocurrency ransom that Colonial paid to the hackers.
Instances like these exhibit that the Justice Division “can comply with cash throughout the blockchain, simply as we’ve got at all times adopted it inside the conventional monetary system,” stated Kenneth Well mannered, assistant lawyer common of the division’s Felony Division.
(Reporting by Sarah N. Lynch and Raphael Satter in Washington; Further reporting by Luc Cohen in New York; Modifying by Chris Sanders, Richard Chang and Leslie Adler)